Rockefeller Family Fund divests from fossil fuels, which built family's fortune

By Terry Wade and Anna Driver

Updated24 March 2016 - 07:01pmfirst published at 02:33pm

Houston: The Rockefeller Family Fund has said that it will divest from fossil fuels as quickly as possible and "eliminate holdings" of Exxon Mobil Corp, saying the oil company associated with the family fortune has misled the public about climate change risks.

Though only a sliver of the endowment's modest $US130 million ($171 million) in assets is invested in fossil fuels, the move is notable because a century ago John D. Rockefeller snr made a fortune running Standard Oil, a precursor to Exxon Mobil. The charity said it would also divest from coal and Canadian oil sands.

Flames shoot from a tower at Exxon Mobil Corp's Torrance Refinery in California earlier this month.

Photo: Bloomberg

Given the threat posed to the survival of human and natural ecosystems, "there is no sane rationale for companies to continue to explore for new sources of hydrocarbons", the Rockefeller Family Fund said.

Asked about the Rockefeller announcement, Exxon spokesman Alan Jeffers said: "It's not surprising that they're divesting from the company."

"The Rockefeller Family Fund provided financial support to InsideClimate News and Columbia University Journalism School, which produced inaccurate and deliberately misleading stories about Exxon Mobil's history of climate research," Mr Jeffers added.

Rockefeller Family Fund director Lee Wasserman responded in an email that Exxon was not singled out.

"We supported public interest journalism to better understand how the fossil fuel industry was dealing with the reality of climate science internally and publicly," Mr Wasserman said. "No specific company was targeted in our push to drive better public understanding and better climate policy."

The Australian Institute of Petroleum has warned higher quality could threaten the economic viability of Australian refineries.

Photo: Jessica Shapiro

Last year, after publication of the stories that Exxon mentioned, New York state Attorney-General Eric Schneiderman launched an investigation into whether the company misled the public and shareholders about the risks of climate change.

On Wednesday, Exxon said those stories "wrongly suggested that we had reached definitive conclusions about the risks of climate change decades before the world's experts and while climate science was in an early stage of development".

Flames shoot from towers at the Torrance Refinery earlier this month. City officials said the "flaring event" was caused by a power outage.

Photo: Bloomberg

The company said it believes the threat of climate change is clear and warrants action.

The divestment comes as the US Securities and Exchange Commission (SEC) ruled that the oil giant must include a climate change resolution on its annual shareholder proxy, a defeat for the world's largest publicly traded oil producer, which had argued it already provides adequate carbon disclosures.

In a Tuesday letter to Exxon seen by Reuters, the SEC said the oil producer cannot keep a proposal spearheaded by New York state's comptroller from a full shareholder vote at the company's annual meeting in May.

If approved, the proposal would force Exxon to outline specific risks that climate change or legislation designed to curb it could pose to its ability to operate profitably.

Exxon had argued that the proposal was vague and that it already publishes carbon-related information for shareholders, including a 2014 report on its website entitled, "Energy and Carbon - Managing the Risks".

The SEC found those reports do not go far enough.

Exxon Mobil declined to comment on the SEC's ruling.

Exxon shareholders have never approved a climate change-related proposal, and last year they rejected by 79 per cent a request that a climate expert be appointed to the company's board.

Nevertheless, New York state Comptroller Thomas DiNapoli, who oversees the state's $US178.3 billion pension fund, called the SEC's decision a "major victory" for shareholders.

"Investors need to know if Exxon Mobil is taking necessary steps to prepare for a lower carbon future, particularly now in the wake of the Paris agreement," Mr DiNapoli said, referring to last year's agreement by 195 countries to rein in rising emissions that have been blamed for global warming.

The Rockefeller Family Fund also cited the Paris agreement, saying: "The science and intent enunciated by the Paris agreement cannot be more clear: far from finding additional sources of fossil fuels, we must keep most of the already discovered reserves in the ground if there is any hope for human and natural ecosystems to survive and thrive in the decades ahead."

Environmentalists cheered the SEC's decision.

"The SEC has rejected Exxon's attempt to silence investors' concerns about the very real financial risks associated with climate change," said Shanna Cleveland of Ceres, a non-profit group that tracks environmental records of public companies.

DiNapoli was joined in the SEC filing by the Church of England, the Vermont State Employees' Retirement System, the University of California Retirement Plan and the Brainerd Foundation.

In response to the divestment movement, many oil industry leaders have said millions of people in the developing world would be condemned to darkness and poverty if society were to halt the burning of fossil fuels before there is ample supply of cleaner energy sources.

As early as 2008, members of the Rockefeller family called on Exxon to increase spending on alternative fuels.

In late 2014, another fund associated with the family, the Rockefeller Brothers Fund (RBF), said it would divest from fossil fuels.